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Why Antitrust Regulators Should Bless Googleola Bid

Google's $12.5 billion acquisition offer for Motorola set off the normal rounds of pontification such blockbuster proposals tend to send off.
While pundits analyze to death the ins and outs and ramifications of the deal, antitrust regulators on Capitol Hill are likely preparing for this new headache, as Google

Google has gotten so large -- 30,000 employees, $39 billion in cash, and as much as 95 percent of the search market in some countries overseas (65 percent in the U.S.) -- that the Federal Trade Commission and Justice Department would be criminally negligent if they failed to scrutinize all of the company's large acquisitions.

Further reading

Google followed that big buy with its largest acquisition to date in DoubleClick for $3.2 billion, which the FTC reviewed for nearly a year before it closed in March 2008.

In 2009, Google agreed to buy mobile ad network AdMob for $750 million, a deal the FTC reportedly agonized over -- and weathered stinging criticism for its failure to competently grok the niche -- before blessing it in May 2010.

So to say Google is keeping regulators busy like no other high-tech company is an understatement. It's making Microsoft look like a startup in this regard.

Now here's the latest bid for Motorola, the struggling phone maker that put Android on the map and is one of the top sellers of Android handsets in the U.S. and Canada. The FTC and/or DOJ would be derelict in their duties if they did not address this latest bid.

I think it begs investigation ... but it also should be passed. This isn't a horizontal merger -- Google buying Bing or Yahoo, which the FTC proved it would stop after it blocked Google's bid to simply partner with it in search in 2008.

The FTC and DOJ like to halt deals where companies try to add more apple trees to their orchards, to use a fruit analogy. The only hardware Google sells includes search appliances for businesses, making this a so-called vertical acquisition.

Rather, this is a defensive maneuver to grant Google possession of 17,000 and counting wireless and other non-essential patents at a time when Apple and Microsoft have turned increasingly litigious to stop the rise of Android at OEMs Motorola, Samsung and HTC, among others.

The deal has some ancillary benefits, too. Google may be able to parlay into bolstering its core businesses, such as the possible integration of Google TV within Motorola set-top boxes, and the ability to more tightly integrate Android with hardware made by Motorola.

But this deal is about Google saving Android's future. If regulators oppose the deal, they would be betraying their bias toward Google, which has become a blatantly greedy Internet company.

That's my opinion, and others disagree. You know, those from the anti-Google camps. Consumer Watchdog said:

"Do you want the mobile phone information monopolist (through its Android operating system and apps) to own a principle mobile manufacturer and its patent technology? To be sure, monopolies look different in the Internet age. But what Google has over all of us is the world's largest repository of private information ever assembled because it tracks every Web site we visit and every search we make. Should an information monopolist like Google have the power to dominate cell phone manufacturing and control patents that could require mobile phones to use its information-tracking Android operations and applications? The debate has just begun."

The American Consumer Institute, meanwhile, offered this concern:

"The latest announcement by Google is just one of over one hundred acquisitions by the company and it emphasizes a worrisome pattern of conduct. There are allegations that Google has pressured cell phone manufacturers not to use competing operating systems, and the latest deal could effectively lockout competition. In addition, the FTC recently announced remedies with Google for its deceptive privacy practices, and numerous law enforcement agencies and attorneys general have targeted the company over its 'Spy-Fi' practices. While in the midst of deflecting privacy charges over the acquisition of location-based data off of customer mobile phones, adding a large cell phone company to its empire will surely serve to echo those same privacy concerns and demand Google to answer further questions about the privacy of its consumers."

Notice a pattern here? Both the Consumer Watchdog and ACI broached "what ifs" were Google to get Motorola. They don't look at it from the practical perspective of how Motorola patents would help Google defend a business under fire.

Rather, they look at how Google could use Motorola phones as devices to bolster its information-grabbing empire and further abuse the privacy of its users.

Nice misdirection, eh? It's alarmist, sure, but they can't well attack it for trying to grab more IP and save its mobile software business, can they?